Resumen de Productivity and Quality in Health Care: Evidence from the Dialysis Industry

Paul L. E. Grieco, Ryan C. McDevitt

• We show that healthcare providers face a tradeoff between increasing the number of patients they treat and improving their quality of care. To measure the magnitude of this quality-quantity tradeoff, we estimate a model of dialysis provision that explicitly incorporates a centre’s unobservable and endogenous choice of treatment quality while allowing for unobserved differences in productivity across centres. We find that a centre that reduces its quality standards such that its expected rate of septic infections increases by 1 percentage point can increase its patient load by 1.6%, holding productivity, capital, and labour fixed; this corresponds to an elasticity of quantity with respect to quality of−0.2. Notably, our approach provides estimates of productivity that control for differences in quality, whereas traditional methods would misattribute lower-quality care to greater productivity